Silent Cal Speaks

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The New York Sun

Call him Calvin Coolidge Cruz. Suddenly Senator Cruz, citing the president who delivered the full-employment economic boom known as the Roaring Twenties, is emerging as a man to watch in the Republican race. Two debates in a row, the senator from Texas declared for the gold standard and sound money, which are associated with high economic growth and low unemployment. He got in ahead of Rand Paul and any of the rest of the pack.

Two debates don’t make a campaign, of course, but the monetary issue is potentially the most transformative question in the race. It’s not just Mr. Cruz, either. Senator Paul, Governors Christie and Huckabee, Senator Santorum, all emerged on this issue last night, each adding enough savvy and subtlety to the question that it is clear the issue is starting to percolate on the hustings. No doubt this is in part because of what happened at the debate in Boulder, when CNBC’s Rick Santelli turned to the Texan and asked him to “focus on our central bank, the Federal Reserve.”

Mr. Santelli asked Mr. Cruz: “Do you want to get Congress involved in monetary policy?” The first thing that needs to be done, Cruz said, is “audit the Fed,” a reference to the Federal Reserve Transparency Act. That bill would enable Congress to investigate whether the Fed is to blame for the catastrophe of the jobs recession that has swallowed the Obama presidency. No doubt the Hillary Clinton chorus will laugh, given that unemployment is now down to 5%. But the jobs participation rate is at its lowest point in two generations, and, save for bankers and Wall Street, no one feels like we’re in a boom.

Senator Paul leapt in at Boulder to mark the issue of inequality. “Let’s bring the Fed forward and talk about Fed policy and how it causes income inequality,” he said, referring to how the Fed has enabled a tiny group to make billions while millions are too discouraged to look for work. What happened last night in the Fox Business News debate, is that Mr. Cruz upped the ante. Questioned by Maria Bartiromo, he outlined a three-part plan to bring us out the stall of the Obama years. He noted that since 2008, growth has averaged an anemic 1.2% a year.

Part one of his plan is his 10% flat tax, which would spell a strategic shift in the structure of our revenue system. Mr. Cruz predicts it would produce 4.9 million new jobs in a decade. The second part is regulatory reform, pulling back the “regulators that have descended like locusts on small businesses.” His third element is sound money, which, he said at Boulder, would “ideally” mean a dollar tied to gold. That would make it harder to fund a socialist government, reduce the need for vast financial hedging, and focus investment in productive directions.

“Every time we’ve pursued all three of those — whether in the 1920s with Calvin Coolidge or the 1960s with JFK or the 1980s with Ronald Reagan — the result has been incredible economic growth,” Mr. Cruz said. What a startling moment. JFK and Reagan get mentioned all the time in presidential debates because they cut the top marginal tax rates and ignited growth. But it’s been a frosty Friday since we’ve heard a candidate praising the Vermonter known as Silent Cal. That’s because the Left likes to blame Coolidge for a soaring stock market that, after Coolidge left office, collapsed into the Great Depression.

The real blame belongs to Herbert Hoover, a businessman-turned-president who turned protectionist on trade (like Donald Trump). It was Hoover’s errors (he raised taxes at the top and bottom), a floundering Fed, and an anti-business FDR who turned the years after the Roaring Twenties into the Great Depression. Similar errors have helped President Obama turn the housing crisis of 2008 into the Great Recession, and the Federal Reserve has done its part by maintaining its zero interest rate policy for too long. It’s like gunning the engine of a car while it’s locked in neutral.

It’s not just Mr. Cruz who’s figured out that monetary policy is an emerging issue. In Fox’s undercard debate, Governor Christie blamed middle class misery and the inequalities of the “investor class” on “this cheap money from the Fed.” Mr. Santorum blamed the Federal Reserve for “protecting a president that is over-taxing and over-regulating” the economy. “The Fed is in big trouble,” Mr. Huckabee declared, saying we’ve lost our monetary standard. A “breakthrough moment” is how all this was characterized last night by one group that follows this issue, the American Principles Project. Let’s hope so. It’s great to hear the Silent Cals of the Republican Party start talking.


The New York Sun

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